The noise free code resolution of an A/D converter is the number of bits of resolution beyond which it is no longer possible to distinctly resolve individual codes. In other words, this is essentially the number of digital code levels actually available after correction for the loss in resolution due to input referred noise. Said another way, this is the degree to which digital codes become lumped together as indistinguishable from one another due to the noise added during conversion, and is called quantization noise.
To counter this loss in resolution, averaging of the digital output signal can be used. Averaging is effective because by collecting a sufficient number of digital output samples, the distribution of sampled outputs that determines noise resolution becomes increasingly tightly defined. The effect is visible as an increase in height and a narrowing in the neck of the distribution of sampled outputs compared with a distribution of fewer samples. This decreases the distribution's standard deviation, and therefore the noise free code resolution.
In order to develop a distribution, though, there must be a minimum level of variability in the acquired signal. This leads to a paradoxical requirement: to raise the resolution of an A/D converter, one can use digital averaging, but with this technique there is an accompanying need to actually have a minimum level of noise in the signal. If a suitable noise signal is not available, then one must be intentionally generated or something that gives the same result.
A general noise signal is one possibility, but is often not selected, most often because it has been filtered out at earlier circuit stages of the circuit than the A/D converter, or is an insufficient noise level. White noise is another choice, however it is cumbersome to introduce without adding significant circuitry and has disadvantages.